The spread of information and
communication tech­nologies (ICTs) continues to facilitate technological change
in the globalizing economy. Recent editions of the Information Economy
Report have documented how the rapid diffusion of mobile telephony and
improved international broadband connectivity, includ­ing in the least
developed countries (LDCs), as well as the introduction of new services and
applications, are facilitating more inclusive development. This not only has
implications for enterprise development but it also expands the scope for
leveraging ICTs in such devel­opment areas as health, education, governance,
the private sector and more.

In order, however, to ensure
that this improved access to ICTs brings about the desired benefits, the
devices and services provided have to respond effectively to the needs and
capabilities of users. In many instances, this in turn necessitates access to relevant
technological capabilities within the domes­tic economy. This applies in
particular to the area of software, which critically influences the
functionality of goods and services offered by both the private and public
sectors. Against this background, the Informa­tion Economy Report 2012 puts
the focus on the role of software in developing countries.

To facilitate structural
transformation and technologi­cal advancement, it is necessary for countries to
build domestic capabilities to allow individuals, firms and organizations to
engage in learning processes. In this context, Governments should seek to adopt
policies that help expand the opportunities for such learning, especially in
new industries that offer wide learning opportunities. The software industry is
such an industry. As a general-purpose technology, software has wide
application throughout the economy and society. It is also characterized by
relatively low capital barriers to entry and its relevance is likely to remain
high in the future.

Developing software
capabilities is important for sev­eral reasons. Software consists of a set of
instructions that enable different hardware (computers, mobile phones, smart
phones and tablets, and the like) to perform the operations required. In this
sense, it can be seen as the “brain” of ICT devices. Software can help firms to
manage their resources better, access relevant information, lower the costs of
doing business and reduce time to market. Greater emphasis on ICTs in the
delivery of government, health care, education and other services is also
raising the need for capa­bilities to develop customized software applications.
Different ICTs are increasingly permeating societies in countries of all levels
of development. In this context, developing the technological capabilities to
adopt and adapt existing software solutions, and eventually to in­novate,
becomes more relevant.

Consequently, countries
increasingly need a cer­tain capacity to understand, manipulate and adapt
software. Other things being equal, locally based software expertise is better
positioned to understand domestic needs and therefore to develop relevant and
innovative applications and content. Countries with well-developed software
industries are better placed to implement their own tailored solutions. Further­more,
close interaction between domestic producers and users generates learning
opportunities and gains in terms of productivity and operational efficiency,
and thereby contributes to market expansion and diver­sification. Software
industries also tend to generate high-end, direct and indirect employment,
especially for skilled youth.

The opportunities of software
and service activities for developing countries – thanks to the low capital
entry requirements as well as the sector’s high-value, high-growth nature and
high-technology, knowledge-rich profile – are well recognized. However, in many
developing countries, it is only recently that sufficient demand for ICT
applications and software has emerged to warrant a more systematic treatment of
the software area. Thanks to changes in the ICT land­scape, there is today more
scope even for small-scale developers in developing countries to participate in
software development and production.

The expanding use of mobile
phones is creating new domestic demand for mobileapplications
and ser­vices geared towards improving access to domestic news and
entertainment, government services, patient care, market information services
and mobile money transfers. Having the software developed locally enhances the
chances of it being adapted to the spe­cific needs of the domestic users (for
example, taking cultural and language considerations into account). Improved
broadband Internet access allows developers in developing countries to engage
in software projects and export their services. Meanwhile, novel software
production modes – such as distributed peer-production over the Internet – are
leading to the creation of new business models based on local software service
provision and adaptation.

As a
framework for its analysis, the Information Economy Report 2012 introduces
the concept of the national software system. It emphasizes that actions and
interactions of domestic software producers and users are greatly influenced by
the quality and afford­ability of ICT infrastructure, access to relevant hu­man
resources and capital, the legal framework, and enabling business infrastructure,
as well as by the links with software networks in the rest of the world.
Overall, the competitiveness of the system is affected by the national vision,
strategy and government poli­cies which should nurture software capabilities
and the software system as a whole. Governments play a central role in the
system. They are important users of software (notably through e-government and
public procurement activities) and they strongly influence the enabling factors
of the system.